Judge: Frank M. Tavelman, Case: 23BBCV02266, Date: 2024-02-23 Tentative Ruling

Case Number: 23BBCV02266    Hearing Date: February 23, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTIONS TO COMPEL ARBITRATION & STAY MATTER

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

Shakira Peel (Plaintiff) brings this action against Medix Staffing Solutions, Inc. (Defendant). Plaintiff alleges that she was the victim of discrimination while an employee of Defendant, ultimately resulting in the retaliatory termination of her employment. Plaintiff’s Complaint states causes of action for (1) Retaliation, (2) Harassment based on Race/Color/National Origin, (2) Failure to Prevent Discrimination, (4) Discrimination, and (5) Failure to Permit Inspection of Employee Records under the California Labor Code.

Defendant now moves to compel the matter to arbitration, stating that a valid arbitration agreement exists between the parties. Plaintiff opposes this motion and Defendant replies.

ANALYSIS: 

I.          LEGAL STANDARD 

Motion to Compel

C.C.P. § 1281.2 states: “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement arbitrate the controversy exists.”

A party seeking to compel arbitration has the initial burden to prove, by a preponderance of the evidence, the existence of a valid and enforceable arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) If the moving party has met its initial burden, then the burden shifts to respondents to prove the falsity or unenforceability of the arbitration agreement. (Id.) 

Stay

Once arbitration has been compelled, in whole or in part, a stay of proceedings is mandatory if the issues in the arbitration and the pending action overlap. (C.C.P. § 1281.4 (if a court “has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”)) 

“The purpose of the statutory stay [under section 1281.4] is to protect the jurisdiction of the arbitrator by preserving the status quo until arbitration is resolved. In the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” (Federal Ins. Co. v. Superior Court (1998) 60 Cal.App.4th 1370, 1374-1375 [citations omitted].) 

II.        MERITS 

Defendant submits a copy of the arbitration agreement (Agreement) that was signed by Plaintiff as part of her job application on August 18, 2023. ((Mrumlinski Motion Decl., Exh. 1.) This agreement appears to bind both parties to arbitration of the disputes relevant to this case. Plaintiff does not dispute the validity of the Agreement, instead arguing that it is unenforceable by nature of unconscionability.

Agreements to arbitrate will not be enforced if they are unconscionable. Unconscionability has two components: procedural and substantive. (Little v. Auto Stigler, Inc. (2003) 29 Cal.4th 1064, 1071.) Both procedural and substantive unconscionability must be present to avoid arbitration but need not be present to the same degree. (Armendariz v. Foundation Health Psychcare Services (2002) 24 Cal.4th 83, 115.)

Procedural Unconscionability

Arbitration agreements imposed as a condition of employment are typically adhesive. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.) When a contract is an adhesion contract, imposed and drafted by the party with superior bargaining power, the adhesive nature of the contract is evidence of some degree of procedural unconscionability. (Sanchez v Carmax Auto Superstores Cal., LLC (2014) 224 CA 4th 398, 403.) However, this fact alone is insufficient to make an agreement unconscionable. (Diaz v Sohnen Enters. (2019) 34 CA 5th 126, 132.) When there is no other indication of oppression or surprise, the degree of procedural unconscionability of an adhesion agreement is low, and it will be enforceable unless the degree of substantive unconscionability is high. (Ajamian v CantorCo2e, L.P. (2012) 203 CA 4th 771, 796.)

The Court finds the agreement here is an adhesion contract by virtue of its presentation to Plaintiff as part of her application to work for Defendant. (See Mrumlinski Decl. ¶ 4, Exh. 1; Peel Decl. ¶ 5.) However, the Court does not find that the adhesive nature of the contract giving rise to the level of procedural unconscionability to invalidate the agreement.  The evidence is clear that the contract was signed on August 18, 2023 by Plaintiff as part of her application to work for Defendant. (Id.)

Defendant argues that procedural unconscionability is low because Plaintiff received ample time to review the agreement before signing. Defendant submits, for the first time in their Reply Declaration, that Plaintiff was electronically provided the agreement on August 17, 2023. (Mrulminski Reply Decl. ¶ 6.) The Court notes that new evidence submitted in reply brief is generally not to be considered except in the exceptional case and if it is considered the other party must be given a chance to reply. (Jay v. Mahaffey (2013) 218 Cal. App. 4th 1522, 1537.) As such, the Reply Declaration will not be considered in the Court’s determination.

Even without the Reply Declaration, the Court finds no showing of significant procedural unconscionability.  The only evidence of procedural unconscionability presented by Plaintiff is that the contract was included with her job application, and she was not given substantial time to review it. (Peel Decl. ¶¶ 5-7.) Plaintiff’s argument that these conditions were procedurally unconscionable relies primarily on the case of OTO, L.L.C. v. Kho, which the Court finds factually distinguishable.

Kho pertained to the presentation of a mandatory arbitration agreement to an existing employee. (OTO, L.L.C. v. Kho supra 8 Cal.5th at 127.) The employer in Kho admitted that the employee was told he must sign the documents to keep his job and that the presenter waited in the employee’s office for him to sign the documents. (Id.) The Court in Kho determined these circumstances indicated surprise and oppression beyond that of a simple employer adhesion contract. Here, Plaintiff was not an established employee of Defendant, and her refusal to sign the agreement would not result in her losing existing employment. Additionally, the agreement was clearly presented to Plaintiff and signed in an electronic form. There is no evidence that someone was directly pressuring her to sign the documents by virtue of their physical presence.

Plaintiff also relies upon Fitz v. NCR Corp., which is also factually distinguishable. In Fitz the employee worked for the defendant over a decade before they were presented with the mandatory arbitration agreement. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 722.) In determining that the agreement in Fitz presented a high degree of procedural unconscionability, the Court remarked, “Few employees are in a position to forfeit a job and the benefits they have accrued for more than a decade solely to avoid the arbitration terms that are forced upon them by their employer.” (Id.) The agreements in Kho and Fitz were presented in entirely different circumstances which make them inapposite to this case.   However, this alone is not determinative as the court must also consider substantive unconscionability.  

Given that Plaintiff has shown a modicum of procedural unconscionability, she bears the burden to show substantial substantive unconscionability. (See Serafin v Balco Props. Ltd., LLC (2015) 235 CA 4th 165, 177–178 [ Holding that when this party shows a minimal degree of procedural unconscionability, the party must make a strong showing of substantive unconscionability to render the arbitration provision unenforceable.].)

Substantive Unconscionability

Substantive unconscionability pertains to an arbitration agreement’s fairness.  The court will examine the actual terms assess whether those terms are overly harsh or one-sided. (OTO, L.L.C. v. Kho supra at 129.) A term is not substantively unconscionable when it merely gives one party a greater benefit; instead, it must be so one-sided as to “shock the conscience” of the court. (Pinnacle Museum Tower Ass'n v Pinnacle Mktg. Dev. (US), LLC (2012) 55 Cal. App. 4th 223, 246.)

Plaintiff argues that the Agreement is substantively unconscionable because it precludes her ability to pursue an administrative charge with the “Civil Rights Division (previously the Department of Fair Employment and Housing).”  The Plaintiff is likely referring to the Civil Rights Department for the State of California, and not the “Civil Rights Division.”  The Court notes that the Agreement expressly permits Plaintiff to pursue such a claim. The agreement includes the following statement:

While I have the right to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board (‘NLRB’), the Department of Labor, the Occupational Safety and Health Commission, or any other federal, state, or local administrative agency, if any federal, state, or local administrative agency proceeding does not finally resolve the Covered Claim, the parties must submit the claim to arbitration under this Agreement.

(Mrumlinski Motion Decl., Exh. 1 at pg. 1.)

The above provision clearly indicates that Plaintiff maintains the ability to submit claims multiple administrative agencies, and furthermore, nothing prevents a complaint to California’s Civil Rights Department if applicable.

The Court also finds Plaintiff’s argument that the Agreement contains conditions which are unfairly beneficial to Medix unpersuasive. On its face, the Agreement binds Medix and Plaintiff equally, with each party agreeing to submit any claims against the other to binding arbitration. As an example of these unfair terms, Plaintiff states that the agreement carves out “unlawful detainer actions or any dispute that arises from Employer’s action to regain possession of the premises.” and small claims suits. (See Oppo at pg. 7.) Having reviewed the Agreement in its entirety, the Court notes that these provisions do not exist. It appears that Plaintiff is either entirely mistaken as to the contents of the Agreement or is referencing an agreement from a prior motion in an unrelated case.

Conclusion

While Plaintiff has established a modicum of procedural unconscionability, she has failed to establish any degree of substantive unconscionability such that the Agreement could be found to be unenforceable. Accordingly, the motion to compel arbitration is GRANTED.

Stay

As the Court grants the motion to compel arbitration in its entirety, the motion for stay is similarly GRANTED.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Medix Staffing Solutions, Inc.’s Motion to Compel Arbitration and Motion for Stay came on regularly for hearing on February 23, 2024 with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION TO COMPEL ARBITRATION IS GRANTED 

THE MOTION FOR STAY IS GRANTED. 

THE COURT SETS AN STATUS CONFERENCE RE: ARBITRATION FOR FEBRUARY 20, 2025 AT 9:00 A.M.

UNLESS ALL PARTIES WAIVE NOTICE, DEFENDANT TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  February 23, 2024                             _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles